Assume that all firms in this industry have identical cost curves, and that the market is perfectly competitive. In the long run, how much profit will each firm in this industry earn each week?
A)$0
B)$1,000
C)$1,500
D)$2,000

Question

Assume that all firms in this industry have identical cost curves, and that the market is perfectly competitive.  In the long run, how much profit will each firm in this industry earn each week?
A)$0 
B)$1,000 
C)$1,500 
D)$2,000

Quizplus · Accepted Answer

In perfect competition, firms will earn zero economic profit in the long run as new firms will enter the industry when there are positive economic profits, driving down prices until profits are zero. Therefore, each firm in this industry will earn $0 in profit each week.

Assume That All Firms in This Industry Have Identical Cost